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HS2: A Fast Train to Nowhere

2013-01-30

Building a high-speed railway from London to Edinburgh seems like a good idea. Having it pass through Birmingham, Manchester, Sheffield and Leeds seems sensible. That is, if you’re Isambard Kingdom Brunel living in the 19th century.

We don’t live in the 19th century. We live at the beginning of the 21st century, in a world where 85% of the economy is in services provided through high-speed information systems. We no longer move men to machines; we move knowledge to networks.

The estimated cost of the proposed railway is £32 billion over 20 years. In reality, that will become £100 billion over 25 years minimum. The benefit is an hour or so off journey times. The cost of travel will remain high.

If London were located in the north of England, it might makes sense to run a high-speed railway south toward Europe. The Channel Tunnel made sense (though Rory Sutherland makes a brilliant counterargument). A high-speed link between Paris and Marseille, Paris and Berlin made sense. Building a new line north from London toward the arctic is daft. Manchester, Birmingham, Sheffield and Leeds are no longer the ‘factories of the world’; they are industrial museums. A new railway would be a coat of paint on a crumbling building.

Should there be a high-speed, high-bandwidth, fiber-optic backbone running the full length of the country? Yes. An architect in Leeds or a film producer in Manchester needs to communicate with global talent and international markets. If these cities are to prosper, they must abandon their Industrial-Era mentality and embrace the Information Revolution. If Brunel were alive today, he’d be designing spacecraft, not railways.

There is no high-speed rail line from London to Reykjavik, Iceland. There is no rail link between Reykjavik and anywhere. Yet Iceland is a successful player in the global entertainment industry. Companies like CCP Games are connected electronically – artistically, intellectually and commercially – to contractors, customers, branch offices and markets around the world.

The days of transporting coal from Newcastle to forge steel in Sheffield to produce machines in Birmingham to weave textiles in Manchester are long gone. We no longer need cadres of managers to organize armies of factory workers to export manufactured goods to the colonies. We no longer live in 1912 or 1952 or 1972 – or even 2002. Facebook was launched in 2004; Twitter in 2006. The iPhone and Kindle were released in 2007. Combined, these products have revolutionized the publishing industry, creating vast new markets for information and entertainment, generating whole new industries in software applications, art and design, music and video, games and tourism. The New Economy is about new services provided by thousands of boutique companies over the internet.

As the UK struggles to regenerate its stagnant economy, it must stop looking for solutions in the past. It cannot compete with Germany for the 10% of the global economy in manufacturing. Moreover, the advent of 3D printing will emphasize intellectual property – scientific and engineering concepts, software and blueprints – not mass production – especially not mass production in Leeds or Birmingham.

Are there benefits to synergy from physical proximity? Yes, Silicon Valley is a prime example, but factors far more important than geography determine the location of such enterprise hubs: climate yes, but also culture, human capital, property rights, financial infrastructure, taxes and government bureaucracy. Running a fast train to Manchester does not mean someone will set up business there. More likely, it will convert northern England into a suburb of London.

Is it worth £100 billion to extend London’s northern suburbs beyond Watford? Surely, the money could be better spent in the hands of entrepreneurs, homeowners and individuals in the form of financial incentives (reduced taxes, low-interest business loans and/or home mortgages) or alternative infrastructure investment (rebuilding the existing rail network, improving the road network, building a national fiber-optic network) and/or reducing the national debt (thereby reducing interest payments on the debt, thereby giving the government more money to spend without raising taxes).

In short, the cost/benefit ratio of building a new, high-speed railway from London to the north of England is not only poor but possibly counterproductive in that the money could be better spent elsewhere. It is a vanity project commensurate with the past, obsolete before it's even built. Can’t our politicians, for once, start thinking about the future?

ETA:

2012-02-07 Newcastle startup scene reaches critical mass

2013-05-25 Warning over flagship government projects

2013-09-24 HS2: 12 arguments for and against

2015-11-19 HS2 ‘abysmal value for money’